Zee-Sony merger negotiations hit a stalemate with looming deadline

The stalemate over Punit Goenka’s appointment as the CEO of the proposed Zee-Sony merged entity continues with both sides unwilling to relent. While Goenka has made it clear that the merger can through only with him leading the company, Sony is pushing Goenka to take on a non-executive role. 

Sources said talks between the two media enterprises have hit a wall ahead of the December 21 deadline for the merger to be completed.

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“Post merger, Goenka could continue to be on the board in a non-executive capacity, but Sony may not be comfortable with day-to-day operations overseen by him. That may be against the spirit of the merger and the entity may continue to function like a larger unit of Zee. This is something Sony wants to avoid post the merger,” said a highly placed source. Sony hence wants to downplay the role of Goenka in the merged entity. “There is a possibility of Sony backing out of the merger if Goenka doesn’t take the backseat,” the source said. 

However, for Zee, Punit Goenka being at the helm of the Zee-Sony merged entity has been a cornerstone of the merger agreement. But Goenka’s recent troubles with the Securities and Exchange Board of India has prompted Sony to rethink. Sony, which will also be the majority shareholder in the merged entity, holding 50.86 per cent stake – wants to appoint an executive from its camp, likely NP Singh, the current CEO of Sony Pictures Networks India. 

This comes at a time when another major media consolidation is in the works, as Reliance and Disney ready term sheet to merge their operations in India. Another source told businessline, “The ball is in Sony’s court. Goenka has communicated that the merger should proceed as per the original agreement with him at the helm of the merged firm.”

Earlier, Goenka had reassured his shareholders that the merger will go on “with or without him,” after SEBI barred Goenka from key managerial positions in Zee Group companies in August, while the regulator completed its investigations. Since then, the Securities Appellate Tribunal has repealed the SEBI order, allowing Goenka to continue as CEO of Zee while SEBI completes its investigations. The SEBI is investigating Goenka and his father Subhash Chandra on the matter of siphoning of funds and showing false recovery on loans.

When contacted, Zee declined to comment. Sony did not reply to queries sent over email.

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